UK Non-Dom Tax Rule Change Could Prompt Exodus

The UK Government could lose substantial tax revenue if its proposed new rules for non-doms prompt too many wealthy individuals to leave the country, international law firm Pinsent Masons has warned.

According to Pinsent Masons, UK-based non-doms contributed GBP 6.57billion (USD8.67billion) in income tax in 2014-15. It explained that this figure represents an average of GBP 56,589 per non-dom over the year, compared with an average of GBP 5,152 per individual within the general population.

Pinsent Masons tax investigation expert Fiona Fernie said: "Non-doms make a highly valuable contribution to the UK economy and any substantial exodus could have serious long-term impacts. Policymakers need to consider what they might lose by placing the status under threat."

Earlier this year, the Government consulted taxpayers on proposals to deem certain individuals, who would otherwise be non-domiciled in the UK as a matter of general law, to be domiciled in the country for the purposes of income tax and capital gains tax (CGT). It intends to restrict access to the "Remittance Basis," with the result that anyone deemed UK domiciled would be unable to access the Remittance Basis regime.

Under the current rules, non-doms pay tax on income and gains outside the UK only when they are remitted to the UK using the Remittance Basis of taxation. Non-doms must pay an extra levy, the Remittance Based Charge (RBC), or pay the full amount of UK tax that would be charged to a resident.

The measure will have effect for most income tax and GCT purposes on and after April 6, 2017.

The total number of UK taxpayers indicating a non-domiciled status on their tax return was 116,100 in 2014-15, up two percent from the previous year. Pinsent Masons said that 5,000 non-doms paid a total of GBP223 million through the RBC in 2014-15, the same sum as was collected in 2013-14.

"The availability of non-dom status gives the UK a real competitive advantage when it comes to attracting wealthy and talented individuals. Removing or altering it now, especially in the wake of uncertainty generated by Brexit, will cause many to look seriously at relocating," Fernie warned.

"Many non-doms are internationally mobile and will not hesitate to move if the grass looks greener. Dismantling the tax status will do little to keep them here in the UK," she added.

News

Howlader Maria & Co joins TGS Global Network

Howlader Maria & Co., Chartered Accountants is a professional firm in Bangladesh which is being formed to provi